Texan charged over multimillion pump-and-dump spam scam

A Texas man has been charged with using spam from compromised machines to hoodwink potential investors into buying virtually worthless stock.

Christopher Rad, 42, of Cedar Park, Texas, was arrested over allegations that he acted as a middleman in a pump-and-dump stock scam involving unscrupulous investors, spam from botnets and Russian hackers. The players behind the scheme hoped false rumours that firms whose shares they held were about to skyrocket would help drive demand for these penny stocks, the Wall Street Journalreports.

Unscrupulous backers would then sell stock at a huge profit before the inevitable crash and burn.

Rad allegedly conspired with another man, James Bragg, and at least two hackers in Russia in a stock fraud scam that ran between November 2007 and February 2009. Bragg pleaded guilty to fraud last October but is yet to be sentenced.

Rad faces conspiracy to commit securities fraud and junk mail distribution offences punishable by a maximum sentence of up to five years behind bars and a fine of up to $250,000.

As well as promoting penny stocks using spam, the duo allegedly hired Russian hackers to seize control of brokerage accounts. These compromised accounts were used to buy shares in penny stocks, providing initial upward momentum to their share price in a bid to lend credibility to the scam, Computerworldadds. ®